Rebuff by Cadbury Doesn˙t Deter Kraft
Published: September 7, 2009

LONDON - Determined to become a global food and confectionery giant, Kraft
Foods said Monday that it would pursue a $16.7 billion takeover of Cadbury,
the British chocolate maker, even after Cadbury rejected that offer as too

Shares of Cadbury soared 41 percent in the day˙s trading in London, and
above the offer price, indicating that investors expected a higher bid from
Kraft or a proposal from a rival candy company like Nestlé or Hershey. Some
analysts said Cadbury could be worth as much as 43 percent more than Kraft

Combining Kraft, which makes Oreo cookies, Toblerone chocolates and Ritz
crackers, with Cadbury˙s Trident gum and Dairy Milk chocolates would create
a giant with $50 billion in yearly revenue, spanning the world from the
United States and Mexico to Britain and India.

Analysts said that confectionery companies tend to trade at higher values,
so adding the chocolate and gum business could enhance Kraft˙s allure with
investors. But Cadbury said that it had reviewed Kraft˙s proposal, which
was made public on Monday, and had rejected it because it "fundamentally
undervalues the group and its prospects."

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and another county heard from:

* September 9, 2009, 5:18 PM ET

Hershey˙s Bargaining Chip in Kraft-Cadbury Fray

The WSJ˙s Ilan Brat reports:

One important element of a combination of Kraft Foods Inc. and Cadbury PLC
could rest in the hands of a competitor: Hershey Co.

Twenty-one years ago, Hershey bought Cadbury˙s U.S. chocolate business,
including factories and the exclusive rights to make and sell well-known
brands such as Cadbury and York Peppermint Patty. Hershey paid $270
million, plus the assumption of $30 million in debt, according to documents
filed with the Securities and Exchange Commission.

The August 1988 agreement also gave Hershey to right to sell Cadbury˙s
Creme Eggs, Caramello and other chocolate products in the U.S., as well as
Peter Paul Almond Joy, Peter Paul Mounds and York Peppermint Patty bars
worldwide for 25 years. The agreement was designed to automatically renew
every 10 years unless Hershey objected.

Such arrangements sometimes include a clause calling for them to be
dissolved upon a change of control of one of the companies. A person
familiar with the agreement said the original terms remain in play. That
means Hershey could maintain the exclusive license to those Cadbury brands
even if Kraft buys the British confectionery maker.

It˙s unclear how significant a part of Hershey˙s sales the Cadbury brands
represent; Hershey doesn˙t break it out, and a spokesman declined to say.
But the old arrangement would deprive Kraft of an opportunity to use those
brands to boost its chocolate sales in the U.S. and elsewhere, industry
analysts said.

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